Dunoon land acquisition inquiry: MPL Herron; HDA & Department of Human Settlements

Public Accounts (SCOPA) (WCPP)

12 June 2020
Chairperson: Mr L Mvimbi (ANC)
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Meeting Summary

Video: Public Accounts Committee, 12 June 2020

The meeting was as a result of a report on the allegation of land purchased at an inflated price by the Western Cape Department of Human Settlements, the City of Cape Town and the Housing Development Agency and undue political influence about the purchase. The Committee had previously deliberated on the report and had agreed to call the parties involved to give evidence. The parties were MPL Mr Brett Herron (GOOD) who made the allegation, the Housing Development Agency (HDA) and the Western Cape Department of Human Settlements. The City of Cape Town had declined to join the meeting as it stated that it was not responsible for the transaction but was merely the beneficiary of the land.

Mr Herron briefed the Committee on the background of the HDA's purchase of land at Racing Park, known as Doornbach, in Killarney Gardens. This was the result of pressure to find a housing solution for the community of Siyahlala informal settlement near Dunoon. He spoke about the urgency of finding a solution and he questioned the prolonged delay. He provided evidence that suggested that the price paid for the property was inflated and that the purchase of the property was unnecessary as there are two other suitable properties in the Dunoon area. He alleged that the purchase of the land amounted to wasteful expenditure. He questioned the appropriateness of the land acquired for use as a human settlement in an industrial park. The Racing Park Owners’ Association had objected to the proposed human settlement development and their lack of consent to such a development.

Members asked Mr Herron if there was political interference in finding a housing solution for the Siyahlala community and if due process and the correct procedures were followed in the land acquisition. Some Members argued that there was lack of evidence for his assertion of an inflated price.

The HDA briefed the Committee on the land acquisition, specifically of the erven 35163 to 35176 & REM 38368 Milnerton. Members asked about the value of the land to test Mr Herron’s allegation that the price was inflated. Members asked about commissioning the evaluators and possible political interference. Members inquired about the reasons for the delay in purchasing this land, which HDA alleged had begun in 2014. Members questioned HDA about the two other suitable portions of land and why they had not been used.

The Department of Human Settlements briefed the Committee on the land acquisition. Members asked the Department about the deviation; the reason for the delay in the land acquisition between 2014 and 2018; and if there was political pressure by the MEC or another political official for it to purchase the land. Members asked for the rationale for it to embark on the long process of acquiring land when there were two portions of land owned by the City of Cape Town close to Dunoon. Members asked about the factors that contributed to the final value being settled upon.

Meeting report

The Chairperson said this meeting was as the result of a report indicating there had been problems of alleged political influence and inflation of a property’s value in a land transaction. The Committee had previously deliberated on the report and had agreed to call the involved parties to give evidence. The parties included MPL Mr Brett Herron (GOOD), the Housing Development Agency (HDA) and the Department of Human Settlements. The report mentioned the City of Cape Town but it had declined to join the meeting as it stated that it was not responsible for the transaction but was merely the beneficiary. The City said that any information needed from it would be made available.

The Chairperson said that this meeting was supposed to have been held last year and was rescheduled for April 2020, but was further postponed due to the Covid-19 National Lockdown.

Ms D Baartman (DA) asked for the record to show that SCOPA had been given legal advice about the order in which the briefing was received. She said that this should show that the Committee “has done as much as possible, up until now, and will continue to do as much as possible, to ensure that we receive these meetings in a fair manner and consider everything in a fair manner”.

Ms N Nkondlo (ANC) asked the Chairperson to confirm if the Committee was having this conversation in camera. She wanted this meeting to be recorded as Committees are meant to allow for public involvement.

The Chairperson answered that the meeting was not in camera as it was being live streamed on YouTube and had been advertised in the media.

MPL Mr Brett Herron submission
Mr B Herron (GOOD) said that he had submitted three sets of correspondence to the Committee. The initial complaint, further information at the end of last year and additional documentation earlier this week– maps, the Racing Park’s Owner Association (RPOA)’s objection and constitution. He presented the following three points which were extracted from these bundles of information:
•The urgency of finding a housing solution or settlement solution in the Dunoon area
- The initial submission to the Committee shows that in February 2018 protests erupted in Dunoon over a proposed demolition of informal homes along the Transnet rail line in a settlement known as Siyahlala.
- Anti-land invasion protests have often targeted the MyCiti Infrastructure and in this case, the MyCiti station of Dunoon was destroyed.
- The urgency was, therefore, to find a solution for the Siyahlala settlement which was preventing the Transnet freight line from operating. This line was exclusively operating to provide transport for solid waste to the Vissershok disposal site.
- This was the context in early 2018 to find an alternative location for the settlement.
- Refers to the HDA's Development Application supplied to the Committee earlier in the week. It is the provincial government application “to rezone the Racing Park industrial park where the acquisition was”.
- This rezoning application is dated October 2019. Page 3 shows a quote from the applicants “in order to secure the well-being of the Siyahlala community… to secure the service continuity of the Transnet railway line …an immediate relocation plan for these community members needs to be implemented”.
- Page 10 again refers to the urgency: “given the urgency and desperate conditions facing the community … until the envisaged redevelopment of the surrounding informal residential environment is complete”
- This document submitted in October 2019 supports the idea that it was urgent to find a solution.
- Refers to the initial complaint and Appendix 4 which was an email from Mr Nigel Titus, the CoCT principal special planner. The email is dated 20 April 2018, months after the Siyahlala protests and “shortly after the identification of this urgency arose”.
- Mr Titus referred to an alternative site, Potsdam.
- “the timing implications of the various options should be considered … if the aim is getting a quick solution then … urgent housing designation immediately would be in the best interests of all concerned”
- Mr Titus recommended “initiating emergency urgent declaration procedures for which we could have answer within a month”
- Mr Titus assisted CoCT in following the same procedure to provide emergency housing for the victims of the Imizamo Yethu fire.
- Mr Titus was therefore advising the leadership and department to pursue a quick course of action using the Potsdam land and the emergency provisions that the municipal planning by-law provides for.
- The relocation of the families in Siyahlala was inherently urgent given their unsuitable living conditions and the fact that the railway line needed to be operating urgently.
- Given the urgency, the Department of Human Settlements (DHS) decision to pursue the long route of acquiring a new piece of land to accommodate the Siyahlala settlement is illogical.
- This can be seen from the dates, the urgency arises in Feb 2018, Mr Titus’s recommendations are made in April 2018 and October 2019 is when DHS is making an application for the rehousing to take place in the Racing Park the land that was acquired at an inflated price.
- The logic is hard to understand, given the urgency, of the long process DHS adopted of firstly acquiring land and secondly going through all these rezoning processes when there was land available
- The CoCT owned the Potsdam site, marked as Site A on the map, on the corner of Potsdam road and Blaauwberg road. It is just down the road from the existing Dunoon site.
- This was reserved in 2014 by then CoCT Director of Urbanisation (later renamed Informal Settlements), Ms Shehaam Sims. She reserved this site for exactly the housing solution DHS was trying to achieve in 2018.
- Refers the Committee to the section 68 of the City’s planning by-law “which deals with a shortened application for emergency housing” and section 69 which focuses on a “shortened application for urgent housing” – emergency housing being a temporary solution and urgent housing being more permanent.
- In 2018 DHS chose a long process of land acquisition and rezoning despite land available for this purpose. We are now in June 2020, Siyahlala still has not been relocated and there has been no solution.

The price: Racing Park was acquired for an inflated price
- The provincial government instructed HDA to acquire the land at a price of R64 million.
- See Appendix 5 of the initial complaint. It is a memorandum from CoCT’s Director of Urban Integration, Ms Namso Baliso. She was responsible for the officials who would acquire land for forward planning purposes – for the use of human settlements.
- In her memorandum she raises concerns for firstly, CoCT’s own evaluation of the property given recent sales in the vicinity – page 3 of Appendix 5.
-“the subject property seems to be overpriced, in comparison with the most recent acquisition of Annandale farm, measuring 72 hectares and bought by the City for R162 million, equating to R225 per metre2 compared to an average of R542 per metre2 for the total developable extent of the land to be purchased”.
- Annandale Farm is marked B on the map.
- Compare Annandale Farm’s R225 per metre2 to the R542 per metre2 which was asking price of the land which was eventually purchased by HDA.
- The seller initially approached the City to sell at about R85 million and then came back and said, “they would look at R58 million plus commission”. Ms Baliso continues: “this is also the case if one utilises the R58 million purchase price where the average purchase price would be R492 per metre2”.
- Both of these figures are more than double the most recent purchase price in the area.
- Ms Baliso expresses concern that DHS was not given access to the basis of the City’s evaluation, despite request.
- If one looks at Ms Baliso’s memorandum, she is expressing frustration that the City’s property management department conducted evaluations of that site, came to recommendations about the value but would not share that evaluation report with DHS which would have to make the decision to acquire it or not.
- Ms Baliso goes on in her memorandum to say that “on the 4th of October, she wrote to property management requesting more information including an evaluation report that would assist her in deciding if the purchase of the property would be value of money for the City or not.”
- “However despite numerous requests property management has not been willing to share the evaluation report on account of negotiations in process”.
- Quotes Ms Baliso’s response to property management on 9 October 2017 “raising the following concerns that evaluation report should still be made available to the user department or the requester”.
- This was viewed as a fair request where the evaluation report would have assisted in the decision-making
- Refers back to the map, portion of land called Doornbach alongside Racing Park. That Doornbach land was acquired for R9 million by City in 2015.
- Doornbach is approximately 130 000 square metres and right next door is the land that province paid R64.6 million for a 100 000 square metres of useable space
- I have had discussions with the Racing Park Owners Association and suggest the Committee at least hear from then as well. Their evaluation is that, of the land that province acquired through HDA, 60 000 square metres is zoned agriculture – this is worth R150 per square metre; 40 000 square metres is zoned industrial and is part of the Racing Park Industrial Park – RPOA suggests this land is worth R300 per square metre.
- RPOA says that the province overpaid for the land. The land was always overpriced which is why it took so long to be sold and why it was never sold in the first place.
- Ultimately the province and HDA paid R1004 per square metre.
- The wetland portion, on the map, was included in the R64.6 million purchase but was already under the control of the City by virtue of the original subdivision to create the industrial park and was worth zero.
- By RPOA’s calculations the 7 hectares of wetland is worth zero, 6 hectares of agricultural land at R150 per square metre is worth aboutR9 million and 4 hectares of industrial land at R300 per square metre is worth R12 million – this comes to R21 million.
- RPOA’s figures coincide with that of the Director of Urban Integration who suggested that sales in the area on average and what the City had paid for Annandale farm would be around R225 per square metre.

• Use: Appropriateness of the land that was acquire
- The Racing Park site is located within an industrial park
- Suggests that the Committee visit the site before making its recommendation
- Refers to RPOA’s objection labelled “Owner’s Association Objection” to the development application, it is a report from Tommy Brimmer, a town planner.
- Refers to pages 8, 9 and 10 of the report.
- The site is within an industrial park – it has warehouses and light industrial factories.
- This is where the department is proposing to build housing.
- Refers to the constitution of the RPOA.
- As pointed out in an email, that within the constitution it binds every single owner within that industrial park.
- The RPOA was set up as a condition of the subdivision that created the industrial park.
- When HDA acquired urban within the industrial park they became bound by the constitution.
- RPOA’s constitution states that the erection of any building within the park needs the RPOA’s consent; in other words, to develop housing on the site the Province and HDA needs the RPOA’s consent.
- RPOA is objecting to HDA's development application to rezone the land.
- In that objection, RPOA make it clear that HDA will not obtain the consent of RPOA.
- The province and HDA have acquired land where they need RPOA’s consent to use it for residential purposes but RPOA is not providing that consent.
- Refers to pages 2 and 10 of RPOA’s objection where it is stated that the consent is withheld.
- Refers to page 5 of RPOA’s objection, Tommy Brimmer points out that recently there was a rezoning application in Paarden Eiland to allow a mixed-use development for residential purposes in this industrial area. CoCT objected to this rezoning for the land portion in Paarden Eiland.
- CoCT cited “the proposed residential use would not be compatible with the industrial area and adverse impacts envisaged in terms of traffic as well as health and well-being of the community”.
- CoCT was also concerned with the loss of industrial use, which is employment generation, that would result from the site being converted to residential.
- Refers to the map, Potsdam, the land marked A,
- It is a short distance down the road, it is owned by the City, it adjoins the Potsdam taxi and bus rank, it is on the MyCiti route, it is between 17 and 20 hectares in extent (almost the same size as acquired by HDA)
- It is unencumbered; it does not have a wetland or other barriers to development for housing.
- It was reserved by CoCT Informal Settlements Department for housing communities from informal settlements in 2014.
- It was available both to the province and CoCT to rehouse the residence of Siyahlala.
- Refers to the map, Annandale Farm, the land marked B, also a short distance away.
- “In recent presentations given to the Ad Hoc Committee for Covid-19 and the Human Settlements Standing Committee there is a new urgency which is the de-densification of the Dunoon area”.
- Annandale was acquired expressly for the purpose of de-densifying Dunoon – allowing Dunoon to extend or expand in a dignified way without overcrowding.
- Annandale is available for Siyahlala and Potsdam is already owned by CoCT, and identified for the rehousing of informal settlements.
- Both these pieces of land were available for the purpose which the site at Racing Park was purchased.
- The alleged inflated price paid for Racing Park by HDA could have been used to develop Potsdam or a portion of Annandale.
- “If we use the R160 000 per Breaking New Ground (BNG) house which a BNG would have cost in 2018, the Department of Human Settlements could have built 400 BNG houses for R65 million – instead it acquired land it did not actually need”.
- Refers to section 6 of RPOA’s constitution. Owners of urban within the Racing Park industrial park are also currently liable for levies which represent an additional financial burden for HDA or the province.
- This amounts to R300 000 per annum in levies in the industrial site.
• The need to relocate Siyahlala was urgent in 2018, in June 2020 no relocation has taken place, the development application for site acquired for the purpose has now been withdrawn.
• 28 months later and no progress has been made.
• “This I submit is because the wrong land was pursued … the spatial planning official who managed emergency applications for Imizamo Yethu advised in April 2018 that it was possible to get approval for [the relocation of Siyahlala to] Potsdam within one month”.
• “Now there is an urgent need to de-densify Dunoon as a result of Covid-19, and there is a proposal that this newly acquired land could be used for that purpose, but Annandale was acquired expressly to de-densify Dunoon, and both Potsdam and Annandale are still vacant, City-owned land sites available immediately”.
• In the documents submitted this week: the process still faces high court litigation, RPOA has now given notice that to approach the high court to set aside the sale of that land on the basis that the sale did not have consent the consent of the ratepayers association
• There was urgency in 2018, there was land available in 2018 at both Annandale and Potsdam, but the Department of Human Settlements instructed HDA to pursue a very long route; undeniable now, as no progress has been made in relocating those communities.
• From available evidence the price was inflated – HDA paid two or three times the Racing Park site’s value.

Ms L Maseko (DA) said that the most important points of inquiry for the Committee were whether there was political involvement in this transaction and if the price was inflated. She asked Mr Herron why it was now that he brought these allegations to SCOPA. Were the allegations referred to CoCT and was he part of CoCT when those transactions were happening? She asked if Mr Herron brought the matter to CoCT’s attention to indicate his concerns about the involvement of the political party in the transaction itself?

Mr Herron replied that, as indicated in the initial complaint, he was the Mayoral Committee Member (MMC) for transport and development for CoCT at the time the alleged political interference took place. Mr Herron had suggested to Mr Davids, the committee procedural officer, that Mr Mark Roundtree be called to give evidence. Mr Roundtree had attended the meeting between the then WC Minister of Human Settlements, Mr Bonginkosi Madikizela, and Mayoral Committee Member, Councillor Xanthea Limberg. At this meeting they discussed the need to find a solution to Siyahlala – Mr Herron was not present at this meeting. Mr Roundtree confirmed that at the meeting the political principles were discussed. The use of the Potsdam site was deemed inappropriate as it was a politically sensitive site – Mr Herron said “by that, I assume that it is close to Table View and there were concerns about the objections from the Table View residents. He said that at that meeting, as can be seen from the email from Councillor Limberg, it was confirmed that the Racing Park site would be pursued by the province. He said that he had brought [the allegations] to the attention of SCOPA when he became aware, despite the recommendations of Ms Baliso, that the province had proceeded to acquire the land in Racing Park. The City had not acquired the land by the time Mr Herron had left CoCT. The province then acquired the land. It was brought to his attention in September or October 2019 around the time he submitted this information to SCOPA. It was the province who acquire the land using HDA as the acquiring party not the City. On the political interference, they would have to get the evidence directly from Mr Roundtree who attended the meeting on Mr Herron’s behalf.

Ms D Baartman (DA) said that her understanding of SCOPA was that the Committee should not be looking at whether someone should buy a property at a certain price. SCOPA’s role was to look at reasons and processes, for example the allegations of political interference. Her concern was that the political interference was alleged based on another person’s testimony and that Mr Herron’s testimony of political interference could be considered as hearsay. She asked in Mr Herron’s understanding, if the City, Department or HDA had to purchase property, what would be the procedure? Does he believe that procedure was followed? If not, why not? If there was a deviation, how should that deviation taken place? Was this followed? If not, why not?”

Ms Baartman acknowledged the request to call RPOA. However when the Committee discussed who to invite, it indicated that the only valuers it would receive information from were those HDA had mentioned. The Committee was concerned about calling independent valuers due to the difficulties of choosing between valuers and of going through their facts and information. She asked how building property on the land financially affect RPOA’s interests. Perhaps Mr Herron does not have this information but one of the other stakeholders might have it. She asked if a purchase has taken place. In the documentation is a letter from the City saying that a purchase had not taken place. She asked if the legal action Mr Herron referred to is in court as she did not see a court case number.

Mr Herron replied that CoCT did not acquire the land as the recommendation to the department head from the director responsible for acquisition was not to acquire the land. It was HDA who acquired the land on behalf of DHS and on its instruction. He replied to Ms Baartman’s question on whether the Committee should be concerned about price, saying that SCOPA must be concerned because if DHS paid an inflated price then that is surely wasteful. It is SCOPA’S concern if a provincial department incurs wasteful expenditure.

He did not introduce the political interference into his statement because he did not attend the meeting between then Minister Madikizela and Councillor Limberg – his comments on political interference were in response to Ms Maseko’s question. He recommends calling Mr Roundtree to confirm this.

He answered Ms Baartman’s question about process, saying that the way he approached this was by asking whether or not the land was needed – which it was not because of the two pieces of land he identified in his presentation – and by asking if the asking price was fair and reasonable. The process for acquiring land using public funds, whether it is the City or the province, is to ask firstly, do we need to buy this land and secondly to ask is the price appropriate? Based on the official and neighbouring property owners, the price was inflated. It is SCOPA’s duty to check if the price was inflated and if there was over-payment.

He referred to the first meeting of the Standing Committee for Human Settlements last year, of which Ms Maseko and Mr America are members. It was addressed by then HOD, Mr Thando Mguli, who made the point in his presentation that DHS had paid a lot of money for the land. This indicated an awareness within DHS that the land was overpriced.

He replied to Ms Baartman’s question about RPOA’s interests, saying the owners were concerned about the value of their investment in an industrial park with the introduction of a housing settlement. However, the RPOA chairperson could provide better evidence on this point.

Ms N Nkondlo (ANC) asked the Chairperson to check the nature of the questions posed to Mr Herron which may be better suited for the other stakeholders invited to present. These stakeholders could affirm or dispute what Mr Herron had presented.

Mr Herron agreed with Ms Nkondlo. His position was to share information he had or received and to ask the Committee to look at if the land was needed, if the price was correct and if the use can be achieved.

Mr D America (DA) said that he believed the scope and mandate of the Committee was expanded by Mr Herron’s presentation. He asked what the zoning of the Annandale farm was – to enable the Committee to decide if the price per square metre was fair. Due to Mr Roundtree’s relationship with Mr Herron, Mr Roundtree’s assertion of political interference is unreliable. He cited Mr Roundtree’s lack of executive authority and that his assertion was based on his political association as a member of Mr Herron’s political party. Mr Herron’s submission of the inflated price of the land being wasteful expenditure was based on insufficient evidence. The Auditor General had not pronounced on this wasteful expenditure so the council could not pronounce on it. Lastly, he referred to the allegation that CoCT declined to buy the property because of the inflated asking price. Mr Herron neglected to provide the Committee with the fact that, at the time CoCT declined the purchase, it did not have the necessary funds. CoCT’s resources were directed towards relief for those affected by the Imizamo Yethu fire. CoCT’s decision to decline the purchase of the property was not based on an evaluation of the property or its purchase price but was based on the fact that CoCT simply did not have the money.

The Chairperson asked that the Members points be kept until the Committee deliberated in private. He asked the Committee to ask questions only to gain clarity on Mr Herron’s presentation.

In response to Mr America’s point that SCOPA was being asked to extend its scope and mandate, Mr Herron said that was not what he was asking. He was asking the Committee rather to fulfil its mandate to investigate the land acquisition using public funds, to investigate if the land was needed and to ask if the price paid was fair and not inflated. If the Committee found the land not to be needed and the price to be inflated then, by definition, it would be wasteful. This falls in the realm of SCOPA to investigate.

Mr Herron replied to Mr America on the zoning of Annandale Farm. He did not know the zoning but assumed that it was zoned for either agriculture or industrial given its location. Zoning was not that relevant because the land would have to be rezoned in any case for human settlement purposes or for mixed-use development to take place.

Mr Herron responded to Mr America’s accusation that he had provided the Committee with insufficient evidence to identify if the land price was inflated. He had presented the Committee with evidence – the official responsible for land acquisition, Ms Baliso’s memorandum.

On Mr America’s question about Mr Roundtree’s allegation of political interference, Mr Herron thought it wrong to conclude that Mr Roundtree’s evidence is politically motivated. All Mr Roundtree’s correspondence, including to the Speaker of Council, was when he was still employed by CoCT and was the support officer to Mayoral Committee Member, Felicity Purchase. The only reason he mentioned Mr Roundtree was if the Committee wanted to investigate the role of politicians in the acquisition. Mr Roundtree was a direct witness as he attended the meeting and could give evidence as to the conversation that took place between then Minister Madikizela and MMC Limberg.

Mr Herron replied about who determined the price was inflated saying he presented the Committee with evidence that the price was inflated. The price, according to Ms Baliso, was inflated two or three times. RPOA said that the price was inflated and there were evaluations that were done. Evaluations will be provided to the Committee by evaluators that it can interrogate. MEC Simmers has said that there is an evaluation of R33 million and an evaluation of R71 million. MEC Simmers said that the evaluation at R33 million excluded one of the urban “and by implication, if he is saying that including that erf, the price of R64 million was fair, that would make that one little erf part of this purchase, the land value the same as Constantia land value”. The Committee had to interrogate if the price of the land was inflated or not. The evidence that he had shared with the Committee indicated that the price was inflated.

The Chairperson said that the report that Mr Herron had submitted was hinged on two matters: political interference and the inflated price of the property. He asked what the distance was between the land proposed for development at Paarden Eiland that was rejected by CoCT, and Doornbach. He asked if the Annandale farm was owned by CoCT and if it had always been owned by the City. He asked if Mr Herron was aware that the department was aware of this ownership.

Mr Herron replied that in his initial complaint he presented his concerns on political interference and shared the evidence he had. The reason he raised Paarden Eiland was because, and this was included in Tommy Brimmer’s report labelled “Objection”, a developer brought an application to rezone Paarden Eiland to allow residential purposes in that industrial area. CoCT recommended to the planning tribunal that the application be refused as CoCT protects industrial land as it creates opportunities for job creation. As the crow flies it is two kilometres away from the site. The Paarden Eiland case shows that rezoning industrial land in Racing Park is not the appropriate use of the land. CoCT has in the past protected industrial land due to its role in creating employment. RPOA would not consent to the use of Racing Park for residential purposes. The Annandale farm was acquired by CoCT in 2017 and was owned by CoCT when Ms Baliso wrote her memorandum. It had been purchased for the purpose of human settlement and de-densifying Dunoon and had been purchased before HDA purchased the Racing Park site.

The Chairperson thanked Mr Herron and Mr Herron left.

Housing Development Agency (Western Cape) presentation
Mr Thando Mguli, HDA Regional Manager; Mr Bosco Khoza, HDA Regional Manager; Mr Phumlani Mbulawa, HDA Western Cape Provincial Manager, briefed the Committee on the Dunoon land acquisition in response to perceptions about HDA acquisition of the erven 35163 to 35176 & REM 38368 Milnerton. The briefing included background to the acquisition, the Transit-Oriented Development (TOD) assessment of the proposed acquisition, flowchart of the land acquisition process, property details of the erven, chronology of events of proposed acquisition, Milnerton properties acquisition process and timeline and the valuations.

Ms Maseko referred to the final slide which indicated the amount per square metre, to ask what the square metre amounts were of the figures excluded from the final purchase. HDA said of the R64.6 million that erven 35 175 and 35 176 were excluded from the final purchase. She asked the square metres of the excluded erven because it will tell us if there was an inflation. She asked what the total square metres of the transaction were after the exclusion of those two erven from the final purchase.

Mr Phumlani Mbulawa, HDA Western Cape Provincial Manager, replied that the two erven on the slide were 0.4 hectares in their extent. They did not affect the agreed initial purchase. They were currently on hold due to the litigation and they have not affected the transfer of those two properties. The total extent acquired was 17.4 hectares of which 5.8 is affected by a wetland that is below the 50-year flood line. When HDA was negotiating with the sellers they only paid for 11.6 hectares that is developable and zoned as industrial land. The square metre rate comes to R568 per square metre.

Ms Baartman asked about the process of commissioning evaluators. Is this a tender process or does HDA appoint people and how does that commissioning process work? How does HDA decide to purchase – what factors do they take into account? Now both pieces of land have been purchased and held in a trust – who does the land belong to?

Mr Mguli replied that the land is owned by the provincial government but held in trust by HDA. The provincial government provided the resources to purchase the land but it is held by HDA for all housing development needs within the boundary of the province. The process by which HDA commissions evaluators is done by means of an advertisement in the prescribed manner of appointing service providers. If it is urgent, then HDA would follow the traditional urgent limited bidding process. If it is having the service providers on a panel, then you would have them on a panel and HDA would use them on a need-to-have basis. The latter is what is usually done for appointing service providers.

Mr Khoza replied about commissioning evaluators saying that securing their services by HDA is based on following a transparent procurement process and that evaluators are retained as a panel. The evaluators are subject to their own professional association.

Mr Mbulawa replied about the factors that HDA takes into account when making an acquisition. HDA follows a standard operating procedure which follows a nine-step process with five segregation areas to ensure transparency and professionalism. On receiving instruction from WCDHS, the HDA town planners will conduct a feasibility and pre-acquisition assessment of those properties and physically visit those sites. Thereafter the WCDHS will send a formal request for acquisition of those properties to the HDA Land Unit in Johannesburg. The Land Unit will issue a report and commission valuers – a process which usually takes three weeks. The HDA Land Unit would hold negotiations of up to two weeks, on conclusion of which the WCDHS would come back on board and compile the plate document which would allow the department to assist the submission from the Land Unit and HDA’s planners. On approval of the plate document, a funding agreement is signed and taken to the HDA Board for further approval before any monies are transferred for property acquisition. He said he would like to add a disclaimer, as presented by Mr Herron, about the correspondence dated 7 November 2017 written by Mr Lwazi Nobazo, that nobody, including WCDHS and HDA has seen the City evaluations and ironically we came to pretty much the same agreement.

Mr America asked Mr Mguli to state if any political pressure was exerted on HDA to purchase that particular land parcel either by the Cape Town Mayor De Lille at the time, the MMC, Ms Limberg, Minister Madikizela, the Premier or any other political actor. He asked if HDA was aware of possible encumbrances upon that land at the time of purchase such as the industrial zoning and that development required permission from RPOA for housing to take place. Would WCDHS or HDA be responsible for paying the levies due to RPOA?

Mr Mguli replied that there was no political interference whatsoever and that it was administratively driven. The only thing that HDA got was the mandate to find a solution for Dunoon and the crisis created around the railway line. HDA had no choice but to look for property in the private sector as a last resort. There was no political pressure, however, he still had to account to his principals and say what HDA was looking for. The land was the right land parcel to purchase, it responded to CoCT’s development agenda in terms of TOD at the time, it was next to public transport, industries and commercial activities which allowed for spatial integration.

Mr Mguli replied about the project encumbrances by admitting that this project was one of the complicated projects left in the Western Cape and that HDA had completed all the easier ones. It was complicated due to the task of performing spatial integration, bringing unfamiliar communities to other areas and bringing people closer to industry. There was a need to appease industry and to appease communities. There was a need to open the economy by clearing people living along the railway line. All these factors were interrelated. HDA asked landowners what they needed to “walk the walk with the community”. One wished to build infrastructure of such a high quality that it would be an exemplar of spatial integration. Mr Mguli described the levies as being “neither here nor there” as they were going to do the development in Dunoon high density for people of different income groups using an open market and BNG – “the very same people that were working in the area would reside there”. HDA had a target of much higher than the owners’ association levy and HDA would have got the return on the investment.

Ms Nkondlo noted that the process for acquiring land was from 2014 so what was the reason behind this four-year delay as the HDA Board approved the purchase only in August 2018. She asked the reason that the CoCT Transport and Urban Development Authority (TDA) did not have the funds for this obligation it needed to fulfil. Did HDA receive the CoCT evaluation which influenced HDA in making an offer of R58 million which was rejected by the seller? How did CoCT arrive at that figure? Did HDA get the CoCT evaluation and do they have a copy of the evaluation? She asked HDA to explain the second evaluation of the property and specifically the mistake that the evaluator made on the evaluation.

Mr Mguli replied that the delays were caused by the project not yet being under the control of the provincial government. In 2014, the land purchase was a CoCT initiative and it only came under the control of the provincial government in 2017 when there was crisis with the Siyahlala community. CoCT asked the provincial government to pursue the land as it did not have the money at the time. The reasons CoCT handed the project over were financial constraints and housing pressures in other areas. He added that this was for CoCT to answer.

Mr Mbulawa replied about the evaluation by referring to the Appendix 5 correspondence of 7 November 2017. Neither WCDHS nor HDA have ever seen the evaluation done by CoCT. The mistake in the second evaluation was that the 11.6 hectares zoned industrial, was incorrectly valued at R200 per square metre because the evaluator had evaluated it for agriculture. It was meant to have been valued at R600 to R700 per square metre for industrial land – as both evaluators had previously indicated in the evaluation report. HDA had then negotiated it down to R568.96 per square metre with the seller. That effectively meant that HDA bought the land at a price lower than the going industry rate used by the independent evaluators.

Mr N Xego (EFF) asked HDA if they had been made aware of any government-owned land in the vicinity – by either CoCT or by the provincial government – before purchasing the land in question.

Mr Mguli replied that, yes, they were aware of land in the vicinity. However, CoCT and the provincial government had plans for the other land parcels in the vicinity.

Mr Mbulawa replied that HDA had inquired into the Potsdam land parcel identified by Mr Herron – which currently falls under the directorate of Riana Pretorius, CoCT Director of Informal Settlements. At the time, HDA was informed by CoCT that that land parcel was earmarked for human settlement.

Ms Baartman noted the points of clarity which had been outlined in the discussion. She asked if HDA knew from where the contestation about the inflated price came and if HDA agreed with her understanding of the process and the facts she had put forward.

Mr Mguli replied that Ms Baartman’s understanding of the process was correct.

Ms Nkondlo asked HDA to respond to Mr Herron’s assertion that RPOA had refused consent to the development of housing in Racing Park.

Mr Mguli replied that HDA was aware of this matter. The provincial government had applied for planning approval for the development to take place. The application is meant to go to CoCT, not to the RPOA body corporate. CoCT has the right to accept comment from everyone in the neighbourhood including the body corporate. It is ultimately the Mayor’s decision to grant planning approval.

Mr Mbalawa replied that consent was given by the Racing Park Owner’s Association and signed in Bellville on 30 November, three months prior to HDA paying for the land parcels.

Ms Nkondlo requested a copy of this document to be shared with the Committee.

Ms Baartman asked HDA to repeat if RPOA had given consent before the land purchase and if there was a consent document.

The Chairperson replied that HDA confirmed that consent was given and a document will be supplied to the Committee. He asked HDA why there was mention of 70 hectares when they said they had purchased only 11 hectares. Is he correct in his understanding that the R64 million was for 11 hectares of land?

Mr Mbalawa replied that the total extent of the land is 17.4 hectares but the developable portion of the land is 11.6 hectares. The difference of 5.8 hectares is owned by HDA but was not paid for.

The Chairperson noted that the Potsdam land was still vacant and asked why it was not utilised considering the urgency raised by Mr Herron for a human settlement development.

Mr Mbalawa replied that HDA had initially approached CoCT about the Potsdam land but that they replied that they had earmarked the property for their own development – and that HDA cannot comment on what was happening with it.

Ms Maseko asked Ms Jacqueline Samson, WCDHS HOD, to respond about Potsdam as this question had been raised by the Human Settlements Standing Committee.

Ms Samson replied that Potsdam was earmarked partially for a transport interchange and that it was therefore not available in its full extent for human settlement development. The Annandale property had health services challenges due to it being on the other side of the N7. When WCDHS looked at the funding needed to develop the Racing Park property in Killarney Gardens, it found that it would cost less to develop as a human settlement than to develop Annandale or Potsdam.

Western Cape Department of Human Settlements briefing
MEC Tertius Simmers; Ms Jacqueline Samson, WCDHS HOD, and Ms Phila Mayisela, WCDHS Chief Director: Implementation, spoke about the Dunoon acquisition. This included the WCDHS locality plan, the factors influencing the property value, their contextual analysis and the land acquisition process.

The Chairperson asked if the City approached WCDHS.

Ms Samson replied that, yes, the City had approached the Department.

Ms Maseko asked WCDHS to indicate the level of urgency for the deviation and if it was not urgent why it had happened. She asked if the deviation was normal or if it was something new within WCDHS.

Ms Samson replied that there was no deviation required for the land acquisition and that due process was followed as indicated in the presentation.

Ms Nkondlo asked WCDHS the reason for the delay of the land acquisition between 2014 and 2018 – Mr Mguli indicated that it was a matter for CoCT to answer. Is WCDHS aware of what could have caused such a delay, given there was already an indication that there was a need for this land for public housing?

Ms Samson replied that the Department was only brought on board when CoCT indicated that they did not have sufficient funding and that CoCT had to prioritise its funding for other urgent matters. The Committee would have to request that CoCT give a reason for that delay.

Mr America asked Ms Samson if any political pressure was exerted on HDA by the MEC or another political official to purchase the land.

Ms Samson replied that, to her knowledge, there was no political interference to acquire the land.

Mr Xego asked what the rationale was for WCDHS to embark on the long process of acquiring land when there were public uprisings resulting in destruction of infrastructure and CoCT owned two land portions in the vicinity. He asked what the reasonable circumstances were for WCDHS not to interact with CoCT about the utilisation of that land for housing purposes.

Ms Samson replied that they acquired the Racing Park land because CoCT indicated specific use for the Potsdam and Annandale land parcels. WCDHS discovered from its assessment that the full housing needs would not be covered by those two existing land parcels. The Racing Park site was acquired to meet the current housing needs in the Dunoon area.

Ms Phila Mayisela replied that, as HDA indicated, there were discussions with CoCT about the Potsdam property. They had received Mr Nigel Titus’s recommendation to explore utilising the land before proceeding to acquire the land in question. CoCT had responded to WCDHS’s request for the land by saying that they would not allow WCDHS to utilise the Potsdam land. The reason they did not develop housing on the Annandale property was it would not have been ready for development under emergency conditions. An amount of R111 million was required for development contributions to service 4500 residential units that were planned for that area. Over and above those costs, there was a need to build a vernacular bridge over the N7 at an estimated cost at R260 million. The total cost to get the site ready for WCDHS to proceed would have cost R370 million. This is why they proceeded to pursue the Racing Park property.

Ms Maseko asked when CoCT replied that WCDHS could not have the Potsdam land – in 2018 or before.

Ms Mayisela replied that it was in 2017 that CoCT refused the land to WCDHS. They have this in writing

In response to Ms Maseko asking who was responsible for property management at the time, Ms Mayisela said that the official in that position was Mr Lwazi Nobaza.

The Chairperson asked why the Racing Park / Doornbach land had not been utilised for the purpose it was purchased.

Ms Mayisela replied that WCDHS bought the land in 2018. They are in the development process – conducting planning and obtaining of development rights. The Department is currently packaging that land for the purposes of human settlement. COVID-19 necessitated the acceleration of plans for de-densification in the overcrowded Dunoon area. WCDHS therefore approached CoCT to fast track its application in terms of section 69 of the planning by-laws.

The Chairperson asked if WCDHS approached CoCT or vice versa for the land acquisition.

Ms Mayisela replied that CoCT approached the Department to acquire the land because CoCT no longer had the funds. They had needed to reprioritise the funding earmarked for the acquisition of the property.

Ms Maseko asked who the MMC responsible in the CoCT was.

Ms Mayisela replied that it was Ms Xanthea Limberg and Mr Brett Herron.

The Chairperson referred to the meeting held by then Western Cape Minister Madikizela as cited by Mr Herron, and asked if the meeting was part of the discussion about acquiring the land.

Ms Mayisela replied that, yes, it was part of the discussion about the land acquisition.

The Chairperson asked if any provincial officials were present in the meeting.

Ms Mayisela replied that, yes, there were both provincial and CoCT officials.

The Chairperson asked if Ms Mayisela was one of the provincial official present in the meeting.

Ms Mayisela replied that she did not attend but her WCDHS colleagues were in attendance.

Ms Baartman asked for clarity from WCDHS about the CoCT request for the land and their funding reprioritisation which meant they were unable to buy the land. She asked about WCDHS currently being in a land use planning and development rights process that has now been accelerated due to the Covid-19 pandemic. She asked if that means the land will be used for its original purpose of housing.

Ms Mayisela replied that Ms Baartman was correct. She wished to affirm that the City planners welcomed the utilisation of the land as could be seen in a CoCT document dated December 2016. She quoted from the document, “As the City planners, we welcome the utilisation of the well-located land in close proximity to existing communities for human settlements development”. This recommendation shows that what WCDHS has done was aligned to all strategic documents – the spatial planning framework (SPF) and integrated development.

Mr D Mitchell (DA) asked if Mr Herron’s office was party to the meeting between MEC Madikizela and MMC Limberg, through his representative Mr Roundtree. He asked if property management was the responsibility of MMC Herron not MMC Limberg as previously stated – as Ms Limberg was MMC for Informal Settlements.

MEC Simmers replied that former CoCT Mayor De Lille split one portfolio into two in which MMC Limberg’s focus was Informal Settlements and MMC Herron dealt with assets and land.

The Chairperson noted that a land value was given of R33 million and of R71 million and that HDA and WCDHS settled on the value of R64 million. He asked for the factors that contributed to that final value being settled upon – as R64 million was not the mean value of the two.

Mr Mbalawa from HDA replied that on slide 17 of the HDA presentation the first and second value are indicated. Slide 18 shows why the Equitas evaluation was R33 million. He quoted from the slide that “the Equitas evaluation assumed that the biggest portion, erf 368, measuring roughly 12 hectares, was zoned as agricultural and not industrial land, therefore it used a rate of R200 per square metre which was outside the evaluation criteria for industrial land which was R600 to R700”. If one were to work out using the correct rate one would get to R77 million which was even higher than the second evaluation at R71 million. HDA only paid for the 11.6 hectares of developable land. If you take the agreed price of R64.6 million and divide it by that extent you get a rand per square metre rate of R568. However, there were two parcels measuring 0.4 hectares eliminated from the first round of negotiations and so the price paid to the seller was R64.6 million.

Ms Baartman asked if she was correct in her understanding that the R33 million of Equitas was an error and if Equitas corrected its evaluation. She asked if HDA paid below market value by about R2 per square metre for the hectares. She asked if the R64.6 million settled on was R2 904 000 below the actual property value.

Mr Mbalawa said that Ms Baartman was correct.

Ms Maseko asked the WCDHS Chief Financial Officer to weigh in on the discussion.

Mr Francois de Wet, WCDHS CFO, replied that he certified that the purchase of the land was value for money on the submission from the HOD. The entire process was audited last year and they did not raise any contentious issues so he presumed that they found the purchase in order.

Ms Samson thanked the Committee for the opportunity to present. Due process had been followed and all the documents will be made available for screening.

Ms Mayisela noted that RPOA’s assertion that bringing in a human settlement would devalue the property had not been tested. She argued that the property value would improve, as these businesses operate close to the Doornbach informal settlement and it would benefit from the area being upgraded by the development of a human settlement. RPOA has every right to submit their objections as an affected party and that it would be the duty of the CoCT to weigh all submitted information.

Mr Mguli thanked the Committee for having invited the HDA.

MEC Simmers said that he had been covered by his Department and wished the Committee well in their deliberations.

The Chairperson thanked the Department, HDA and Mr Herron. The Committee then deliberated in camera on the way forward based on the presentations that they had been given.

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